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Abolition of assured shorthold tenancies – unintended consequences for sublets of flats

Posted on 30 January 2023

In connection with abolishing the right of landlords to terminate assured shorthold tenancies by simply giving two months' notice under s.21 of the Housing Act 1988, the Government is proposing to abolish assured shorthold tenancies completely. They are to be replaced by a new form of tenure comprising periodic tenancies (having no fixed expiry date) that can be terminated by landlords only on one or more of the grounds that will be specified in the proposed legislation, which are expected to be based broadly on those in the 1988 Act.

It is understood that the agreements for these new tenancies will be able to contain rent increase provisions, exercisable not more frequently than annually, with landlords giving notices proposing a  new rent and with aggrieved tenants having rights to apply to the First Tier Tribunal to cap any increase in rent to a new rent at a reasonable level – this will be similar to the right under ASTs given by s13 of the 1988 Act.

Since this new type of tenancy will not have a fixed termination date and cannot be terminated by the landlord except where specific grounds exist, they will probably be considered to grant the tenant "security of tenure". Many long leases of residential units, including leases held by some PRS operators, contain covenants that allow the units to be sublet only on ASTs or other forms of residential tenancy that do not grant security of tenure. Unless the legislation will contain provisions overriding such covenants, which is not yet certain, leaseholders may find that future sub-lettings of their flats to individuals for residential use will be prohibited since the grant of security of tenure may be unavoidable.   

It is understood that lettings of premises comprised in purpose-built student accommodation are to be excluded from this new regime and made instead subject to the regime applicable to student accommodation supplied by universities.

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